Need Help on roller coaster equity curve

londonkid said:
a harsh but good post LF. It is very clear from the OP post that he does not have a solid edge and is relying on the 'gut feel', very likely he is someone else's Mr N's 'reliable profit centre'. My advice would be similar in that you should liquidate all of your accounts and stop trading for now. If you are serious and determined to make it in this business I would start doing some research about how the markets actually work. This will be harder than you think as the majority of textbooks/forum content/other media do not tell you this.

Personally OP I would continue your career/job dont put on hold any other plans while you research an edge. To do this you will have to have a good understanding of why and how the market moves. Choose a liquid instrument where the bulk of the trading is completed in the sessions you will eventually trade (if you get that far). Then go to work on researching who each of the main participants of the instrument are, what their purpose/goal is, their MO, the times they do their business. You need to be in a position where for example the ADR, seasonals, session liquidity etc is ingrained in your brain. You need to now everything about your chosen market, you need to analyse who wins/who loses/who is prepared to lose and why. You then design your plan to extract as much of the ADR as possible with risk focussed entries. This is the sort of info that is very rarely discussed on ET (funny that). Do not go buying any cheap ebooks, be very careful who you listen to. Be very careful and wary of technical analysis. Personally I am in the camp that it is possible to grind out a smallish edge using TA but most will not, I don't use it other than to know how weaker hands are likely positioned. Remember a rising TL or stochastic will sometimes work and sometimes not. The real juice is in working out why they sometimes 'work' and sometimes 'fail'.

GL.
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My view is its possible to grind out a smallish profit via TA or tea leaves but it certainly isn't an edge. Its premise is fatally flawed.

surf
 
I do not think you should add to a position that goes against you. I would put on my initial position and keep it untouched until it reach target price or stop loss level. Check the sucess-rate of your positions and adjust your stop-loss according to that. Let's say 1 out of 3 positions reach target-price. For example, then setting a stop-loss equal to half the range from initial position to target price would have you on break even. This assumes you have some kind of way to predict target price. I would try to approach your problem systematically, also regarding position size, it depends on how much money you have and how many losses you expect to have in a row, meaning how valid your analysis has been historically.
 
Tom.Leverage said:
I do not think you should add to a position that goes against you. I would put on my initial position and keep it untouched until it reach target price or stop loss level. Check the sucess-rate of your positions and adjust your stop-loss according to that. Let's say 1 out of 3 positions reach target-price. For example, then setting a stop-loss equal to half the range from initial position to target price would have you on break even. This assumes you have some kind of way to predict target price. I would try to approach your problem systematically, also regarding position size, it depends on how much money you have and how many losses you expect to have in a row, meaning how valid your analysis has been historically.
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Wow so much input from everyone thanks guys. I guess I have a lot to learn and reevaluate everything.

My question to you Tom is what happens if you have been wanting to short a stock. With your analysis you believe this stock is going lower. However it is very hard to initiate the short position when your stock is moving in the opposite direction of where you think it will go, especially when you have no idea how far the market can take it. Hence you wait for the market to confirm your analysis before initiating a position. (This is something i am working on, having no emotion to price but selling when people are buying(resistance) and buying when people are selling(support))

Thus you chase the entry to position(instead of waiting for another high) when market starts to confirm your analysis/direction. But in the next few days, your trade rallies with huge momentum in the opposite direction....thus causing you a loss on the position. However after doing a thorough analysis, price shoots up only to squeeze shorts into a perfect shorting area. An area of resistance where if price breaks above, everyone who was short would give up and accept loss. I almost accepted my loss until, price creeped back below resistance and signaled a trap. Thus I was at a loss on my position, but this was THE AREA to short. Someone else mentioned on this thread, that I shouldn't always believe in market rules and believe in your hunch.

Anyways one of my big shorts is IBB.
http://emptymindtrading.com/2015/06/29/shorting-biotech/
 
Well it depends on the precision of your analysis, but keep adjusting your stop loss further back as the position moves against you is not for everybody. But if you go with moving your stop loss then calculate your average risk per trade and compare it to the success-rate of your trades and do some back-testing to find the optimal stop loss and profit taking. It's just about money management.
 
ScalperJoe said:
1. Maintain one account for long term investing, and play the long side only when the market makes a draw. Do not try to pick the top of the index for the fade, it's a sucker's play, and I've been the sucker too many times, lol! Sure, you may score once in awhile and make a quick gain. Historically, the market has ALWAYS rallied off every dip, regardless of the reason for the draw (1987 crash, dot-com crash, financial crisis crash, flash crash, etc.).

2. Maintain another account for short term volatility plays, such as the IB futures account, where you can capture intraday swings on the S&P Emini or crude, and play long AND short.

And regarding AAPL, why are you trying to fade a move on one of the most heavily owned stock in the world, with a long term overall bullish chart, and a stock that is part of all three main indices (Dow/S&P/Nasdaq)? There are lots of weak stocks with weak fundamentals and bearish charts out there to fade. Sure, AAPL may take a dip here, however you will probably have more upside gains on buying the dip than trying to fade it.

In any case, if you keep two accounts outlined above, it will help with smoothing out the equity curve.
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I shorted AAPL because I saw a top forming and the consensus was bullish. :)
The ETF that I was all in on was IBB. Too bad I chickened out of holding that much size right before it tanked.
 
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